Los Angeles cannabis businesses that owe back taxes wouldn’t have to pay late fees and interest under an “amnesty” program proposed by the City Council.
To qualify, the businesses would have to pay their city taxes within three years.
The council’s unanimous vote on Tuesday, asking the Office of Finance to draft language creating the program, comes at a time when city leaders are searching for money to cover basic services after closing a $1-billion budget gap.
More than 500 of the roughly 700 licensed cannabis businesses in the city collectively owed about $400 million in taxes — an amount that includes $100 million in penalties and $35 million in interest, according to an October report from the Office of Finance.
The total amount owed increased to $417 million as of December, according to Matthew Crawford, the office’s assistant director.
But only about $150 million is collectible, since some tax debts are outside of the three-year statute of limitations and some cannabis businesses are no longer operating.
Based on a projection that about half of eligible cannabis businesses would take part in the program, the city would collect about $30 million in back taxes while waiving about $25 million in penalties, the October report said.
Under the amnesty program, about 20% of the revenue would go to the city’s general fund and the Office of Finance. The Los Angeles Police Department and the city attorney’s office would receive about 40% for illegal cannabis enforcement, and the remaining 40% would fund social equity grants to cannabis operators, particularly members of low-income and minority communities that have been subject to disparate enforcement of criminal cannabis laws.
“The city finds itself with a unique opportunity to bring businesses into compliance and, at the same time, properly fund cannabis industry-centric programming,” City Councilmember Imelda Padilla said during Tuesday’s meeting.
Owners of cannabis businesses say the 10% city tax rate on their gross sales is exorbitant, at the same time that illegal cannabis businesses have carved out a chunk of the market.
“Not only are we competing against the illicit market, we’re competing against licensed dispensaries that the city is allowing to stay open who have made it their business model to not pay tax,” Daniel Sosa, who owns four cannabis dispensaries in the city, told the council on Tuesday.
The amnesty program should be mandatory for businesses that are behind on their taxes, and those who default on their payments should have their licenses stripped, Sosa said.
Sosa said that the tax on cannabis sales should be “just like every other business pays in the city: guns, tobacco, alcohol, major, major billion dollar corporations.”
Other business tax rates in the city range from 0.11% to 0.425%, according to Crawford.
Last month, the council placed a cannabis-related measure on the June 2 ballot that, if approved by voters, would close a tax loophole for illegal cannabis businesses and open them up to the threat of civil collection.
About half of the the 20-some folks who trudged into the club’s Woodland Hills offices were Latino. Four of them were chairman David Hernandez and his family.
“People are sick, hurt, or fed up with politics,” the soft-spoken 77-year-old told me with a laugh before the speech began.
It was a dramatic turn from three years ago, when Trump reclaimed the White House with 48% of the Latino vote, the highest percentage ever captured by a Republican presidential candidate. A record number of California Latinos won legislative seats. The Hispanic Republican Club opened chapters in Ventura and Orange counties. Rodriguez now sits on the California Republican Party board of directors along with former Cudahy mayor and fellow club member Jack Guerrero.
How the quesadillas have flipped. CNN poll released earlier this week showed Latino support for Trump went from 41% last February to just 22% right now.
“It’s the visuals of those raids,” Hernandez acknowledged with a sigh. “It only makes sense that people will feel afraid. Some of our supporters and friends, they’re suffering.”
He turned to his vice chair, Tony Barragan, who reviews restaurants for the club’s weekly radio show. Near them, a table hosted three clipboards fat with paperwork for new members to fill. It had a total of one name. “How many of the places you’ve visited are feeling the crunch?”
“We gotta win the Hispanic vote. I hope that he [Trump] changes his approach and remembers that all men are endowed by their Creator with certain unalienable Rights.”
Fat chance of that, Tony.
The cheers were muted as the State of the Union pageantry kicked off. When Trump claimed early on that “inflation is plummeting, incomes are rising fast, the roaring economy is roaring like never before,” only one club member offered a golf clap.
Maybe the audience knew that was just too big of a whopper.
No one seemed particularly animated in the beginning except Rolando Salmerón. He sat in the front cheering and fist-pumping and chanting “USA! USA!” every time Republicans gave Trump a standing ovation.
Los Angeles Hispanic Republican Club chairman David Hernandez hosts a political radio talk show at the studios of AM Radio 870 in Glendale in 2022.
(Luis Sinco / Los Angeles Times)
The electrical engineer, who gave his age as “over 1,000,” came to the United States from El Salvador illegally in 1975 but was now a citizen. He told me during dinner that Trump had done “more good in one year than Democrats ever did in 30” and especially supported his deportation deluge because MS-13 members assaulted and bullied his son during his high school years.
“Trump deported three million people — Obama deported way more,” said Salmerón. He wore a hat emblazoned with “FIGHT” over the famous photo of a bloodied Trump raising his fist just after a would-be assassin’s bullet grazed his ear. On the bill was an embroidered version of the president’s signature. “Unfortunately, the media that we have — including the L.A. Times — doesn’t say the truth.”
I mean, I think the truth is Trump’s deportation machine might not hesitate to hassle Señor Salmerón over here, like it has other Latinos, if he was in the wrong place at the wrong time.
We watched Trump’s speech on Fox News, which kept cutting to unflattering shots of conservative scapegoats like Rep. Ilhan Omar and Sen. Elizabeth Warren. Those prompts uncorked snide comments from members — “Traitor!” someone yelled when the television flashed an image of Supreme Court Justice Amy Coney Barrett — that turned the atmosphere in the room from reserved to suddenly rollicking.
Hernandez, however, stayed silent.
While Trump bloviated about tariffs, the Hispanic Republican Club chair nibbled on dessert. As the triumphant U.S. men’s hockey team made a cameo, Hernandez was looking at his smartphone. Taxes, illegal immigration, foreign policy — nothing seemed to move Hernandez even as his fellow members got rowdier and rowdier. When Rep. Brad Sherman appeared on the screen, Hernandez finally said something: “There’s our congressman!”
But once Trump began to attack his enemies, Hernandez began to whisper comments with a smile to his daughter, who sat at the lonely check-in table. He laughed after the president gestured to the Democrats sitting glumly before him in the House of Representatives chambers and growled, “These people are crazy.” When Trump announced the awarding of Medals of Honors to a Korean War fighter pilot and a Marine who helped to capture former Venezuela dictator Nicolás Maduro, Hernandez — a Navy veteran — finally applauded.
I thought Trump’s speech, the longest State of the Union address ever, was a giant, xenophobic bore. So did viewers — a CNN survey found it was his worst-received State of the Union address ever and ranked even lower than any of Joe Biden’s attempts. But at the Hispanic Republic Club bash, we skeptics might as well been living in a different dimension.
“I liked the personal touch,” Hernandez told me after. “We need more of that. This is a marathon, not a sprint.”
“It was beautiful,” said 68-year-old Ricardo Benitez, who’s running for a state assembly seat in the San Fernando Valley and greeted Salmerón with a “¿Entonces, cipote? [What’s up, man?] — the only Spanish I heard all night. The Salvadoran immigrant was impressed by “how our president acknowledged victims of crime and how he freed Venezuela…He’s doing a good job regardless of what his enemies are saying.”
Benitez scoffed when I asked if he thought Trump’s immigration raids would cost Republicans Latino support in this year’s midterms.
“Democrats don’t know anything. They think the immigration raids will stop people from voting. That’s not true. Deportations have always happened. Obama deported more people.”
Various political flyers for various republican candidates sit on a table at the offices of L.A. Hispanic Republican Club on Tuesday in Woodland Hills.
(Ronaldo Bolanos / Los Angeles Times)
Nearby, Lani Kane helped to clear tables. “I like that [Trump] honored civilians and our military,” said the 50-year-old, whose T-shirt identified her as a daughter of a World War II veteran. “But in a way, I understand why Democrats don’t like him. The speech was all ‘I, I, I.’”
The Sylmar resident stayed quiet when I asked if she thought Latinos would stay with the GOP for the midterms and beyond.
“If Republicans can continue to promote our values and protect our youth and lower taxes, I hope they do,” Kane finally said.
But did she think they would? This time, Kane nodded vigorously.
“I think Hispanics are starting to wake up.”
Well, I agree with her there. But I don’t think they’re waking up the way Kane thinks.
When myself and a Times photographer thanked the group and left, the number of Latinos at the Los Angeles Hispanic Republican Club State of the Union potluck, already small, dropped by a quarter.
WASHINGTON — A trio of Senate Democrats is calling for the government to start refunding roughly $175 billion in tariff revenues that the Supreme Court ruled were collected because of an illegal set of orders by President Trump.
Sens. Ron Wyden of Oregon, Ed Markey of Massachusetts and Jeanne Shaheen of New Hampshire are unveiling a bill on Monday that would require U.S. Customs and Border Protection to issue refunds over the course of 180 days and pay interest on the refunded amount.
The measure would prioritize refunds to small businesses and encourages importers, wholesalers and large companies to pass the refunds on to their customers.
“Trump’s illegal tax scheme has already done lasting damage to American families, small businesses and manufacturers who have been hammered by wave after wave of new Trump tariffs,” said Wyden, stressing that the “crucial first step” to fixing the problem begins with “putting money back in the pockets of small businesses and manufacturers as soon as possible.”
The bill is unlikely to become law, but it reveals how Democrats are starting to apply public pressure on a Trump administration that has shown little interest in trying to return tariff revenues after the Supreme Court announced its 6-3 ruling on Friday.
Because of the ruling, going into November’s midterm elections for control of Congress, Democrats have begun telling the public that Trump illegally raised taxes and now refuses to repay the money back to the American people.
Shaheen said that repairing any of the damage caused by the tariffs in the form of higher prices starts with “President Trump refunding the illegally collected tariff taxes that Americans were forced to pay.” Markey stressed that small business tend to have ”little to no resources” and a “refund process can be extremely difficult and time consuming” for companies.
The Trump administration has asserted that its hands are tied, because any refunds should be the responsibility of further litigation in court.
That message could put Republicans on the defensive as they try to explain why the government isn’t proactively seeking to return the money. GOP lawmakers had planned to try to preserve their House and Senate majorities by running on the income tax cuts that Trump signed into law last year, saying that tax refunds this year would help families.
Treasury Secretary Scott Bessent told CNN on Sunday that it’s “bad framing” to raise the question of refunds because the Supreme Court ruling did not address the issue. The administration’s position is that any refunds will be decided by lawsuits winding their way through the legal system, rather than by a president who has repeatedly stressed to voters that he has the ability to act with speed and resolve.
“It is not up to the administration — it is up to the lower court,” Bessent said, stressing that rather than offer any guidance he would “wait” for a court opinion on refunds.
Trump has defended his use of the 1977 International Emergency Economic Powers Act to impose broad tariffs on almost every U.S. trading partner, saying that his ability to levy taxes on imports had helped to end military conflicts, bring in new federal revenues and apply pressure for negotiating trade frameworks.
The University of Pennsylvania’s Penn Wharton Budget Model released estimates that the refunds would total $175 billion. That’s the equivalent of an average of $1,300 per U.S. household. But determining how to structure reimbursements would be tricky, as the costs of the tariffs flowed through the economy in the form of customers paying the taxes directly as well as importers passing along the cost either indirectly or absorbing them.
The president has previously claimed that refunds would drive up U.S. government debt and hurt the economy. On Friday, he told reporters at a briefing that the refund process could be finished after he leaves the White House.
“I guess it has to get litigated for the next two years,” Trump said, later amending his timeline by saying: “We’ll end up being in court for the next five years.”
Reporting from Sacramento — Uber and Lyft continue to expand their dominance in California, and taxi companies are looking to the state Legislature for some relief.
“If communities value taxicabs, then we’re going to have to have a regulatory environment that allows cab companies to thrive,” said William Rouse, general manager of Yellow Cab of Los Angeles. “Right now, that’s just not the case.”
Rouse and others in the taxi industry have turned to Assemblyman Evan Low (D-Campbell) for help. Low has introduced AB 1069, which aims to ease taxi regulations to make the companies more competitive with their ride-hailing rivals.
Under Low’s legislation, which overwhelmingly passed the Assembly last month, taxi regulation would occur regionally rather than city by city. This means, for instance, cabs could pick up passengers in Los Angeles, drop them off in Santa Monica and vice versa without needing multiple permits.
Taxis also could lower or raise their prices — similar to Uber and Lyft’s surge-pricing models — in response to demand, with a maximum price set by each region.
“If we don’t do anything now, they will completely be annihilated,” Low said.
In California, numbers show the extent of the taxi industry’s decline and the ride-hailing boom. Taxi trips dropped nearly 30% in Los Angeles from 2012, right before Uber and Lyft began operating, to 2015. New research from the Brookings Institution shows that the number of ride-hailing drivers doubled in Los Angeles, Sacramento, San Diego and San Jose in 2015.
Uber and Lyft’s business models rely on using public pressure and lobbying to shape and change laws and regulations, said Elizabeth Pollman, a professor at Loyola Law School who has written about how Uber and Lyft have challenged existing state and local rules.
“Their business model wasn’t just to replicate the world we had, but rather to create a new model,” Pollman said.
Uber and Lyft have succeeded at the state Capitol in getting regulations and laws passed to benefit their industry and shooting down those that don’t. Even if Low’s bill passes, major regulatory disparities between ride-hailing companies and taxis will remain.
Taxi drivers still will have to pass fingerprint-based background checks, while Uber and Lyft drivers face less onerous rules. After years of delays, the California Public Utilities Commission, which regulates ride-hailing statewide, is scheduled in the fall to decide whether ride-hailing drivers will need to pass fingerprint checks as well. Neither Uber nor Lyft has taken a position on Low’s bill, but each company has been generally supportive of loosening taxi regulations.
Still, cab companies and transportation experts said the legislation could have clear benefits for the taxi industry. Currently, it costs more than $3,000 a year for taxi permits to operate in four cities — Torrance, Redondo Beach, Hermosa Beach and Manhattan Beach — that stretch roughly six miles along the Los Angeles County coast. In Silicon Valley, similar annual city-by-city fees can run $13,000. Low’s bill aims to wipe away such charges and replace them with a single payment.
The measure would promote greater competition by allowing taxis to grow their own on-demand apps and other dispatch services with fewer restrictions, said Bruce Schaller, a New York-based consultant who monitors both industries.
Schaller said the taxi industry’s problems go beyond regulation, and cabs will need to dramatically improve their service and reduce their fares.
“Why do people use Uber and Lyft?” Schaller said. “It’s because they’re cheap and they show up. That’s it.”
Low’s bill faces many obstacles. Last year, he wrote legislation that would have turned over taxi regulation to the state, but Gov. Jerry Brown vetoed it. The governor’s veto message said he didn’t believe such a major change was warranted. Low’s current bill shifts the burden from cities to counties, but counties don’t want the responsibility.
In a May letter opposing the bill, a representative of the California State Assn. of Counties wrote that counties were ill-equipped to handle taxi regulations without help from cities.
“AB 1069 confuses the relationship between counties and cities by arbitrarily placing the entire burden on the county for taxicab licensure,” the letter said.
Low said he’s open to another entity, such as regional agencies including the Southern California Assn. of Governments in the Los Angeles area, to regulate taxis instead of counties handling them. But he warned that local governments shouldn’t be shortsighted in maintaining strict regulations and high fees that could continue driving taxis out of business.
In that case, Low said, cities “won’t get any of their revenues whatsoever.”
